Actuarial Basics

Actuarial basics pages explain how Canadian insurers turn claim activity into pricing, reserving, and underwriting results. This section is for readers who want the measurement layer behind policy language, not just the contract wording itself.

Start With Premium Timing

• Earned Premium
• Unearned Premium
• Return Premium

Then Read Claim-Cost Measures

• Incurred Losses
• Loss Reserve
• Loss Frequency
• Loss Severity

Then Read Performance Ratios

• Loss Ratio
• Expense Ratio
• Combined Ratio
• Premium
• Risk Class
• Policy Limit
• Deductible
• Coinsurance
• Adverse Selection
• Reinsurance
• Underwriting

Why This Section Matters

Pricing, limits, retentions, and recovery rules all rest on assumptions about loss. Even a light actuarial foundation helps readers understand why policy wording and premiums look the way they do.

In this section

• Combined Ratio
  Underwriting measure that adds losses and expenses against earned premium.
• Earned Premium
  Portion of premium attributed to the coverage period that has already run.
• Expense Ratio
  Underwriting-expense measure used alongside loss ratio and combined ratio.
• Incurred Losses
  Claims-cost measure combining paid amounts with reserve changes.
• Loss Frequency
  Claim-occurrence rate for a defined book of business or exposure base.
• Loss Ratio
  Claims-cost ratio showing how much earned premium is consumed by losses.
• Loss Reserve
  Estimated amount set aside for claim payments and related claim obligations.
• Loss Severity
  Average size of claims when they occur in a given line or portfolio.
• Unearned Premium
  Portion of premium still tied to the unexpired part of the policy term.